After months of blockbuster gains, Wall Street's top tech stocks are suddenly stumbling as questions about artificial intelligence and stretched valuations unsettle even their most loyal investors. While the prospect of lower interest rates are energizing real estate, banks, and manufacturers, tech stocks are showing signs of fatigue. Even the so-called "Magnificent Seven"—Amazon, Alphabet, Apple, Meta, Microsoft, Nvidia, and Tesla—face growing skepticism about high valuations and the true potential of AI, per the Wall Street Journal. Nvidia's upcoming earnings report is being closely watched as a potential bellwether for the group.
Individual investors, typically enthusiastic about tech, were net sellers last week—particularly of names like Palantir, Alphabet, and Broadcom, according to JPMorgan. The Journal spoke with an investor in Phoenix who said he's cut back his exposure to big tech by a quarter in recent days, finding prices too steep after months of outsize gains.
The mood shift follows a rapid 41% run-up in the Nasdaq since April and echoes a sharper AI-related selloff earlier this year, triggered by a low-cost Chinese competitor. There have also been underwhelming launches, including of OpenAI's GPT-5, which failed to live up to its marketing hype. Even OpenAI's Sam Altman compared current AI investing fervor to the dot-com bubble. With inflation stubborn and cracks showing in the labor market, not all investors are betting on a tech rebound. Some are turning to "defensive plays" in sectors such as utilities and retail, per the Journal. Echoing Altman, the Guardian's Phillip Inman notes "it could be 2000 all over again."
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